Speaking to Bloomberg last week, Marc Faber gave viewers a rundown of his thoughts on the markets as an announcement from the Fed regarding QE2 nears.

On equities, Faber is not optimistic in the short term. He expects a selloff after the Fed announcement on Wednesday, noting that many investors could be disappointed with the language released out of the Sept. 2—3 FOMC meeting.

In addition to his expectations regarding investor reactions to the FOMC meeting, the American Association of Individual Investors (AAII) released results of a survey which show overly optimistic sentiment of further gains in the S&P. Faber doesn’t like any asset that is too heavily weighted with investors optimism.

Faber does say, however, he doesn’t anticipate a full-blown selloff to below 1040 on the S&P. If that was to happen, he said, the Fed will print more money to support stocks.

Faber warns of an over-bearish outlook on the S&P in the intermediate term, saying the Fed may be engineering a crack-up boom in the U.S. economy with policy initiatives, which include negative real interest rates in sovereign credit markets. In this scenario, money printing could make its way into stocks and other risk assets for between six months and a year, he says.

Faber’s point is: Any selloff in the S&P could be rather mild, providing investors an opportunity to buy cheaper stocks before a temporary, but extended, rally begins — fueled by a money-printing Fed.